Glossary of Terms

ADDRESS VERIFICATION SERVICE (“AVS” a Visa Service): When this service is utilized it does two things. First, it helps to prevent fraud by allowing entry of the billing zip code and Address (numerical value only) as an extra measure to make sure the cardholder is the one authorizing the transaction. Second, this lowers the risk of the transaction by verifiying cardholder information: This results in a lower rate to the merchant for Visa consumer hand-keyed transactions.

AVS FEE: The fee associated with an authorization or attempt for an authorization using the Visa service for Address Verification.

BATCH FEE: The fee associated with the closing of the terminal or point of sale device in which authorized transactions are stored. This is essentially the deposit step of the transaction which submits the authorizations for settlement. Typically batch occurs once daily.

CARD ISSUING BANKS: Banks which issue cards with the Visa, MasterCard, or Discover logos embossed on the card. These banks are entitled to benefits including billing rights based on the service they select for their card issuance including Interchange Discount rates.

CARDHOLDERS: Consumers or businesses which carry the cards issued by the Card Issuers of Visa, MasterCard, or Discover.

CHARGEBACK FEE: A fee which is assessed to the merchant when a transaction is reversed due to reversal of a charge plus this fixed fee which is called a chargeback. These events can happen for a variety of reasons including an unsatisfied cardholder, fraud, etc.

CHECK SERVICES: There are a variety of Check services which can guaranty checks or convert checks to an Electronic Transaction similar to a Credit Card Transaction.

CORPORATE CARDS: A business card typically clears at the higher priced Interchange categories which when separated out on billing statements or within Bucket Billing scenarios will typically clear as Non-Qualified.

DAILY DISCOUNTS: A process where the funding to the merchant has the fees associated with the transaction deducted with or at the time of the deposit. Thus the deposit has taken the discount rate with the daily deposit. The alternative is to have the fees deducted on a monthly basis—see monthly discounts.

DISCOUNT RATE: The percentage and per item fee charged on Interchange. This rate may or may not include other fees such as Network Fees, Dues and Assessments, depending on the pricing structure.

GATEWAY: Refers to a third party such as Authorize.net which offers secure transaction processing over the internet. This type of processing can take the place of a terminal and can be integrated into a merchant’s website. There are gateway monthly fees and per item fees associated with the use of Gateways if desired by the merchant.

HAND-KEYED: Simply meaning the cards magnetic stripe was not swiped and the card data was typed into the terminal or point of sale. Transactions over the internet or telephone are hand-keyed transactions. The magnetic stripe was not captured and neither was the signature in a hand-keyed transaction, thereby creating a higher risk and ultimately higher cost transaction. Consumer cards hand-keyed they typically will clear as a Mid-Qualified rate in a bucket or tiered pricing structure.

INTERNET or MOTO accounts (meaning “mail order / telephone order”): These business types or accounts are primarily business-to-business or internet. These business types are expected to have all hand-keyed transactions so rates and risks are higher.

ISO/MSP: The registration given by Visa to the organization is ISO which means independent sales organization and from MasterCard MSP which means Merchant Service Provider. When a company is fully compliant with registration they are considered “registered ISO/MSP” of a specified bank. The bank is the entity which moves funds; the Processor handles the data only.

MAGNETIC STRIPE: The stripe on the back of credit cards which holds security data which helps qualify the transaction for the lowest rates on interchange. A swiped card is considered to be face-to-face with signature. These transactions are the lowest risk and lowest rate.

MERSATECH: The registered ISO/MSP partner used with GSMP. MersaTech is a BBB gold star recipient with award winning customer service.

MID-QUALIFIED RATE: A Bucket which describes a higher rate than Qualified which is charged to merchants for processing a hand-keyed transaction from consumers {and sometime rewards cards clear as a mid-qualified as well}. There can be a mid-qualified credit, debit, rewards, or more. Primarily these are consumer cards which are hand-keyed and meet all other requirements of Interchange.

MONTHLY DISCOUNTS: This is the process where the amount batched or closed at the end of a day matches the deposit funding. Fees associated with the processing are taken out in one lump sum at the end of the month as a monthly discount.

NON-QUALIFIED RATE: Term that describes the highest rates charged to merchants in a bucket billing program. The transactions are typically swiped or keyed for business or corporate cards. Additionally, Visa transactions where a consumer cards are hand-keyed without AVS will Downgrade to Non-Qualified.

ON ACCOUNT or STATEMENT FEE: The monthly fee that covers many costs associated with the maintenance of the Merchant Account on the Network. Some costs include the mailing of the monthly report, security issues, network data, and more.

PIN BASED DEBIT: PIN Debit is a transaction in which the customer uses a debit card and enters in their PIN number. This functions essentially as an ATM transaction and the merchant pays a per item fee and PIN Network Fees for each transaction. Depending on the average ticket ran significant savings can be gained by using PIN Debit especially for businesses with average tickets of over $50 and a place to have the customer enter their PIN securely such as a Point of Sale or register.

PROCESSOR: This is the owner or leasing company for the Network or combination of Networks used to complete the transactions. Our Processor is First Data Commercial Services although in some instances other Processors maybe utilized for your solution.

QUALIFIED RATE: Term that describes a swiped transaction conducted face-to-face with a signature where the full contents of the magnetic stripe were read. Usually includes all consumer credit cards (and debit cards if a separate category for swiped Debit is not set up in the billing). These are the lowest risk transactions so they carry the lowest discount rates.

RETRIEVAL FEE: A fee which is assessed if a cardholder initiates a chargeback. It is designed to cover costs associated with requesting documentation of the transaction, The retrieval seek to obtain: a signed receipt, imprint of card, or any supporting documentation of the sale from the merchant as an attempt to defend the dispute against becoming a chargeback.

REWARDS CARDS: These popular cards are quickly becoming the cards of choice for both businesses and consumers. In 2006 it was estimated that over 35% of all Visa transactions were a reward card. MasterCard just issued an entire new line of Rewards cards called World Cards to compete. These rewards cards offer a variety of benefits to the cardholder such as air miles or free groceries. These programs are not free to administer so higher rates are paid to the Card Issuers to offset these costs. Increases in Reward Cards have forced many bucket billing scenarios to add new buckets or tiers for better and more accurate billing these ever increasing and popular cost categories.

SURCHARGES: This fee is charged in addition to a standard or “Qualified” rate. As an example the entire volume may pay a certain percentage say 1.81% and $0.15 per item. Then on the back page or elsewhere on the statement additional fees are charged for Mid-Qualified, Non-Qualified, etc. These additional fees over the rate already charged are in addition to the original 1.81% and $0.15 per item charged (in our example) so they are Surcharges.

SWIPED DEBIT: This is a transaction where a consumer check or debit card is used like a credit card (swiped) without the entry of a PIN number. The transaction must take place face-to-face with the magnetic stripe fully read and with cardholder signature to qualify.

SWIPED TRANSACTION: This refers to a face-to-face transaction where the magnetic stripe is swiped and a signature is obtained at the point of sale.

TRANSACTIONS: Every ticket or sale is a transaction. So when a payment is made for the entire purchase made by a cardholder then that is one transaction.

VOICE AUTHORIZATION: This is a service not used often but is used when the credit card terminal or point of sale is not available and the merchant desires an authorization for a credit card perhaps at a trade show. After Authorization is obtained the merchant will later force this transaction into their terminal or point of sale for final settlement and batch closure.